7 minute read 27 Jul 2022

How metaverse and Web 3.0 can create real value for your organization

By Janet Balis

EY Americas Marketing Practice Leader

Transformation leader in media and marketing. Innovator. Digital native. Change agent. Passionate advocate for women and gender parity. Influencer. Mother.

7 minute read 27 Jul 2022
Related topics Innovation Consulting

The metaverse is all around us, unlocking substantial value for companies.

  • How can you harness the metaverse to build brand?
  • How can you achieve the optimal balance between physical and digital consumer experiences?
  • Why is focusing on employee experience critically important? 

The metaverse and Web 3.0 have energized the business, technology and consumer landscape. Adoption of non-fungible tokens (NFTs), decentralized finance (De-Fi), cryptocurrency and metaverse worlds continues to accelerate as early adopters and capital move at pace into this new landscape. Many major consumer brands have embraced the opportunity to use this new space to innovate around their brands and how they reach the next generation of consumers. For some, the energy may be overhyped and prone to volatility, certainly around cryptocurrency, for example. But companies have an opportunity to take a balanced strategic perspective as they lead their teams into these new domains, contemplating both the opportunities and the risks appropriately. 

There is no question that paradigm shifts create opportunity to lean into new technologies, creativity and business models. The publicly reported numbers around investment, user adoption and transaction volume already validate the upside thesis. And the hubris may be well placed as long as it equally appreciates the other side of the coin. These shifts will challenge companies in dramatic new ways as they manage new enterprise risks, defend against a greater digital, challenge companies’ sustainability goals until new blockchain validation methods become the norm, and require mindful care of culture and identity as we each express ourselves in the virtual formats of the metaverse. This dichotomy of innovation is typical in a moment of extreme disruption, and it creates an opportunity for companies to lead deliberately and thoughtfully.

Defining the metaverse and Web 3.0 for brands

The metaverse and Web 3.0 space are continuing to evolve. It is easy and natural to conflate the many ideas of this emerging landscape. So, the current dialogue generally begins with definitional scaffolding to frame the conversation. The metaverse is best described as the front end of the experience. Otherwise put, it is the future of how humans will experience the internet. That digital experience is consumed on one of many hardware devices, including gaming consoles, mobile devices, television screens, desktop and laptop computers, virtual reality headsets, and more. Over time, friction between humans and hardware will be reduced to make the experience more seamless and natural.

And then the definition of Web 3.0 focuses on the notion of the decentralized infrastructure that drives more of the back end of the technology. In Web 3.0, we find the buzzword bingo of all the decentralized concepts: decentralized applications (dApps), decentralized exchanges (DEXs), De-Fi, decentralized autonomous organizations (DAOs), decentralized data networks (DDNs), cryptocurrency and more. The critical enabler of Web 3.0 is blockchain technology, which by now most people understand to be technology enabling a distributed (or decentralized) ledger where each transaction is validated along the way by the broader community. The metaverse and Web 3.0 work hand in hand – new experiences and new peer-to-peer technologies.

Tangible applications of the metaverse and Web 3.0 for business

Once definitions are established, key questions brand leaders are asking include: What are the most compelling use cases for brands? Is the metaverse a medium for branding and consumer experience? How should I navigate this vast landscape? Is it possible to monetize this future? How will concepts like DAOs enhance brand innovation and creativity? 

1. A medium for branding.

Today, there are brands executing highly creative concepts ranging from gaming to virtual apparel try-on to virtual fashion shows and events. Right now, the biggest challenge is scale of adoption and fragmentation. It is early days for the vast majority of the metaverse worlds, including the most successful, outside of those that are highly established gaming and entertainment platforms. So, while there is branding success in the creative concepts being executed in emerging platforms like Roblox, it is important to recognize the marketing effort required to get people to the experience, and substantial value is driven in earned impressions.

In other words, the principal value, for now, comes from the public relations and social media that surrounds these metaverse efforts today (and this is likely temporary). 

2. Physical and digital consumer experiences.

As companies look to enhance their physical world experiences, there is powerful potential for creating hybrid experiences that augment physical retail, travel and hospitality, entertainment, and physical customer service, for example. Like branding, consumer adoption and scale will be the barrier, but brands with loyal and passionate consumers will be at an advantage with an opportunity to create new virtual-physical consumer journeys. Today, the analogous experiences principally occur in mobile applications as we order before we arrive at a quick-serve restaurant, plan a cruise before we arrive on a ship, check into our hotel before we arrive on site and more. The fundamental opportunities are unlocked by the creativity, persistence and three-dimensionality of the metaverse. This is likely not a quick win, but for brands enjoying the sweet spot of the right sector and consumer fandom, it may be a very fruitful endeavor. Companies have a new call to action to look at the full end-to-end journey and find the graceful dovetails between the physical and digital worlds to deepen the experience and loyalty.

3. Employee experience.

The opportunity for large-scale companies to bring their teams into the metaverse is a natural and compelling use case. Companies do not need to wait for consumer adoption for this use case to materialize because they can catalyze it. The possibilities are endless – recruiting, learning and development, culture-building globally, co-creation, collaboration, and more. And done right, the metaverse as a global engagement platform really does reduce travel and benefit the environment. Most importantly, for companies engaged in the war for talent, the metaverse becomes a new enticement to compete for the attention of millennials, Gen Z, and later on Gen Alpha, as future generations are as comfortable in virtual worlds as they are in the physical world. As better three-dimensional virtual work environments lean into the post-pandemic hybrid work reality and decentralized organizational concepts continue to take shape, it is very likely that companies have a dramatically new talent agenda to shape.

NFT considerations

Beyond these three ideas, there are obviously many other opportunities for companies to pursue in the metaverse and Web 3.0, but the key is not simply replicate what other brands are doing. NFTs, which are a frequent topic in brand conversations, must be put in context. NFTs are, fundamentally, a means of establishing ownership or access irrefutably, and when minted, they can offer a form of monetization. That ownership or access can relate to intellectual property, a collectible, art, access to a club or event, and more. But the key is to understand whether the application of NFTs to a brand is (1) natural and seamless to that brand and (2) natural and seamless to the end consumer. If so, then the current NFT craze can absolutely be applicable, but if not, it may be worth reconsidering.

In general, the consumer is our guide to all new brand strategies, but answering the following questions can be a powerful way to guide the metaverse and Web 3.0 conversation at any company:

Why is the metaverse and Web 3.0 a key business imperative? 

Is it important to our current or future consumers or customers? Is it critical to our innovation agenda? Do we think we need to pursue this to drive our talent agenda?

When do we believe we need to pursue this at scale? 

When will our customers be in the metaverse? When will our competitors be there?

Where do we think we want to play? 

Where are our consumers convening in the metaverse? What are their natural behaviors in Web 3.0? What worlds comprise their natural landscape?

What do we want to build? 

Is it a one-time or persistent experience? Should it be for our consumers, employees or vendors?

How should we bring our vision to life? 

How should we be thinking about creative, technology, data, privacy, risk, tax, accounting, legal, regulatory, privacy and more?

Summary

Virtualization as a trend will continue to thrive, and brand leaders are likely to find inspiration from other business applications of the metaverse and Web 3.0 across their companies. Virtual and predictive management of manufacturing, maintenance, supply chain and more are likely to scale quickly, so brand leaders may find natural collaborators cross-functionally. And as blockchain becomes more of a mindset, the decentralized nature of transactions will put even more pressure on the enterprise to think differently both internally and externally about management of the enterprise. For the entire C-suite, it becomes a powerful opportunity think very differently. As the virtual and decentralized concepts of metaverse and Web 3.0 continue to unlock new possibilities for customer experience and business value and generational shifts continue to accelerate, companies that embrace the opportunity to innovate will be rewarded.

About this article

By Janet Balis

EY Americas Marketing Practice Leader

Transformation leader in media and marketing. Innovator. Digital native. Change agent. Passionate advocate for women and gender parity. Influencer. Mother.

Related topics Innovation Consulting